Galliford aims for 2% profit margin

Galliford Try's construction division aims to increase its profit margin to 2% within three years, reversing a year of losses.

In the group's annual results last week it announced a £400,000 loss in its construction arm. However, a restructuring in May 2002 meant that its second-half performance was better than the first half. It made a £1.6m pre-tax profit over that period, which equates to a 0.4% margin.

Andy Sturgess, construction managing director, expects a margin of 1% over the next 12 months, with further improvements to follow. Sturgess said: "The message is that we have turned a corner, and this is borne out by a strong second half."

Sturgess added that the division did not aim to increase turnover, simply to raise profitability.

The restructuring cost 310 jobs and resulted in the establishment of six business units, all of which have returned a profit since their formation. The restructuring is expected to lead to savings of £4m a year.

The group as a whole made a pre-tax profit in the 12 months to 30 June of £13.5m, a fall from £18m last year. Turnover dropped from £649m to £638m.

Galliford Try's housebuilding arm made a record profit before interest of £24.1m and its order book rose 8% last year to £67m.

Galliford Try also announced that Jonathan Dawson, a managing director of merchant bank Lazard, will join the board as a non-executive director in January. At the end of December deputy chairman Hugh Try will retire, having been part of the company for 48 years.